ETH Strategy is an onchain treasury engine that amplifies ETH exposure by harnessing structured volatility. STRAT is a better way to own ETH. Here is an overview thread about our protocol.

The STRAT token is amplified ETH. When ETH climbs, STRAT climbs faster. How does this happen? STRAT is fully backed by ETH, and the ETH-per-STRAT (EPS) is continually increasing. STRAT receives what you can call 'ETH yield.'

How does EPS grow? The protocol finances ETH purchases through two mechanisms: primarily convertible debt (bonds) and equity (at-the-market issuance).

Users bond USD in exchange for the protocol's convertible notes, which feature out-of-the-money (OTM) conversion rights into STRAT. The USD debt raised through bonding is used to purchase ETH immediately, increasing the ETH backing per STRAT. Because the conversion rights on STRAT are OTM, fewer STRAT tokens are minted relative to the treasury's ETH growth, driving EPS higher through accretive dilution.

What attracts USD bonders to come and buy OTM conversion rights on STRAT? People bond because OTM conversion rights (call options on STRAT) are inherently valuable, significantly higher than the cost of capital provided. The call option can be used to perform delta-neutral options trades, earning yield on the USD.

To productize this trade, we're launching a strategic vault. The vault bonds USD for STRAT convertible notes, uses the notes as collateral to then sell short-dated ETH call options. If the ETH options expire in-the-money (ITM), the vault profitably converts the bonds, earning yield for the vault and increasing EPS for STRAT. If options expire out-of-the-money (OTM), the vault pockets the premium. In both cases the vault generates delta-neutral yield. This yield is what will attract USD to protocol bonding and lead to EPS growth for STRAT. In the early stages of the protocol, bonding will only occur through the vault.

As we have seen in traditional markets, the market tends to price in future bonding demand and premiums for STRAT. The market prices EPS growth velocity. This leads to higher STRAT premiums in the market than current EPS.

Traditional companies exploit this premium via ATM (at-the-market) equity offerings, directly monetizing speculative appetite. ETH Strategy achieves a similar effect to ATM offerings using Uniswap V4 liquidity pools. When market prices significantly exceed intrinsic EPS backing, a portion of the LP buy volume flows directly into the ETH treasury through V4 hooks. This mechanism captures the speculative premium for treasury growth, further accelerating EPS appreciation and our equity layer.

Higher EPS means STRAT delivers leveraged ETH exposure. As ETH price rises and note conversions occur, every STRAT token becomes backed by more ETH. EPS growth compounds, enabling STRAT holders to benefit from ETH appreciation with built-in leverage, without liquidation risk or direct borrowing costs.

The ETH Strategy flywheel provides value to STRAT holders in the form of amplified ETH exposure, to USD bonders, in the form of delta-neutral yield, and to ETH as a whole, by sweeping supply into long-term treasuries, alongside peers such as @SharpLinkGaming, @BitMNR, and @BitDigital_BTBT

More announcements soon. Turn🔔on to stay ahead of every update.